MA PUI YIN FLORA AND ANOTHER v. MA SIK HUNG BRUCE, the administrator of the Estate of MA YIU, deceased

HCMP 1054/2022

[2023] HKCFI 3083

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1054 OF 2022

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J U D G M E N T

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A.  INTRODUCTION

1.  This is the substantive hearing of the Originating Summons (“the OS”) taken out by the 1^st plaintiff and the 2^nd plaintiff (“P1” and “P2” respectively, and “Ps” collectively) in these proceedings.  Ps and the defendant (“D”) are siblings.  They are the children of the late Mr Ma Yiu (“the Father”) and the late Madam Leung Kin (“the Mother”).  P1 is the eldest daughter, P2 is in the son in the middle, and D is the youngest son. All of them are adults.

2.  In the OS, Ps are seeking, inter alia, (a) an order to remove D from the office of the administrator of the Father’s estate and to appoint P2, or alternatively Mr Tsang Kam Chuen of Messrs Tsang, Chan & Woo (“Mr Tsang”, a practicing solicitor), as the new administrator of the Father’s estate; (b) an order requiring D to render a true and perfect inventory and account of the Father’s estate, (c) an order that D shall pay all sums due to the Father’s estate after taking of the said account; and (d) costs of these proceedings be paid by D personally and not by the Father’s estate.

3.  In the hearing before me, Ps are represented by Mr Richard Yip (together with Mr Stephen Ku), and D is acting in person.

B.   BACKGROUND

4.  The Father passed away intestate on 8 December 2006.  The Father was survived by the Mother, P1, P2 and D.

5.  On 16 June 2008, by the Letters of Administration under Grant No. HCAG 003285/2008 (“the Grant”), D was appointed as the administrator of the Father’s estate.

6.  The Schedule of Assets and Liabilities annexed to the Grant shows that the Father’s estate compromised of cash/shares totaling in the amount of around HK$ 1,077,927.99.  Details are as follows:

(1)  Cash deposited at banks under various accounts with Hang Seng Bank Ltd, Standard Chartered Bank (Hong Kong) Ltd, Bank of China (Hong Kong) Ltd in the amount of around HK$ 687,927.99 (HK$ 622,875.49 + EUR 6,591.60); and

(2)  500 units of holding in HSBC Good Fortune Capital Guaranteed Fund (Fund Code: 43010) held under a securities account with Hang Seng Bank Ltd (which was subsequently redeemed upon maturity in the amount of USD 50,000 in August 2007).

7.  On 7 March 2009, the Mother passed away intestate.

8.  On 1 September 2009, the safe deposit box of the Mother was inspected and 3 certificates (“the Certificates”) concerning some immovable properties in Mainland China (“the Mainland Properties”) were found therein.  On the face of the Certificates, the owner of the Mainland Properties is 馬耀基.  D assumes that this is a name used by the Father during the Father’s lifetime.

9.  On 21 February 2011, by Letters of Administration under Grant No. HCAG 012846/2010, D was appointed as the administrator of the Mother’s estate.

10.  On 9 December 2015, D obtained a reseal of the Grant in the Family Division of the High Court of the Republic of Singapore.  The Schedule of Assets annexed thereto shows that the Father’s estate include assets held with DBS Vickers (Hong Kong) Limited as follows: -

(1)  Cash balance of HKD 38,088.03;

(2)  9,982 shares in Hong Kong Land Holdings Limited;

(3)  927 shares in Jardine Strategic Holdings Limited; and

(4)  1,998 shares in Mandarin Oriental International Limited.

11.  On 5 May 2016, Ps’ solicitors wrote to D, in which Ps’ solicitors demanded D to do or not to do the following in respect of the Father’s estate (“the 05.05.2016 Letter”):

(1)  To stop taking any further action without Ps’ approval;

(2)  To give an account of the Father’s estate within 14 days;

(3)  To distribute all assets of the Father’s estate equally among the beneficiaries; alternatively, to deliver up or pay into court all assets in relation to the Father’s estate; further or alternatively, to agree that the Grant be revoked and there be a new grant of the letters of administration concerning the Father’s estate to both Ps or either of them.

12.  On 18 May 2016, D affirmed an Additional Schedule of Assets and Liabilities concerning the Father’s estate, in which 9,982 shares in Tai Cheung Holdings Limited and dividends were set out.

13.  On 23 September 2016, Ps commenced proceedings against D to remove D as the administrator of the Mother’s estate, ie HCMP 2568/2016.

14.  On 22 June 2017, pursuant to a consent summons filed by Ps and D in HCMP 2569/2016, a consent order was made by Master J Wong whereby D was removed as the administrator of the Mother’s estate, and Mr Tsang was appointed as the new administrator.

15.  On 4 June 2021, a bankruptcy order was made against D upon a bankruptcy petition presented by Ps against D in HCB 7754/2019.  The Official Receiver (“the OR”) is the trustee in bankruptcy of the bankrupt’s estate.

16.  On 12 January 2022, Ps’ solicitors wrote to D and said that the circumstances with respect to the Father’s estate as set out in the 05.05.2016 Letter persisted.  Ps proposed that D be removed as the administrator of the Father’s estate and Mr Tsang be appointed as the same.  D did not agree to this proposal.

17.  On 30 June 2022, Ps’ solicitors wrote to D and demanded D to step down from the office of the administrator of the Father’s estate, and to provide a full and accurate account of the Father’s estate.

18.  On 12 July 2022, D wrote to Ps’ solicitors and claimed that he had fulfilled his duties as administrator of the Estate.

19.  On 4 August 2022, Ps commenced these proceedings against D.

20.  On 9 March 2023, DHCJ Winnie Tsui gave directions for the further conduct of these proceedings, including leave to D to file and serve his affirmation in opposition to Ps’ claim in this case.

21.  On 14 April 2023, D filed his affirmation in opposition (“D’s Affirmation”), in which D claimed that he had provided an account of the Father’s estate by that affirmation.

22.  On 30 June 2023, upon the application made by Ps and the OR by a consent summons filed on 14 June 2023 in HCB 7754/2019, Master Phoebe Man made a consent order (“the 30.06.2023 Order”) that retrospective leave be granted to Ps to commence and proceed with the proceedings in this case against D for recovery of damages for committing devastavit and breaches of trusts arising from his office as the administrator of the Father’s estate (“the Claim for Damages”), subject to, inter alia, (a) no judgment or order obtained by Ps in this case shall be enforced against D without leave of the court, and (b) Ps shall not apply for any order for costs personally against the OR or the trustee in bankruptcy in this case.

C.   PRELIMINARY MATTERS

23.  Before going to the issues in this case, it would be necessary for me to record the discussion on some preliminary matters at the beginning of the hearing on 23 November 2023.

24.  On 31 October 2023, D wrote to this court and asked whether he had the right to attend and to participate in the hearing on 23 November 2023.  In his letter, he enclosed two letters from the OR dated 6 October 2023 and 19 October 2023 respectively.  In these letters, the OR expressed the view that Ps’ application for an order to remove D from the office of the administrator of the Father’s estate is not a claim for a debt provable in bankruptcy.  However, the Claim for Damages is a claim against the properties in the bankrupt’s estate.  Accordingly, Ps’ claim is a hybrid claim.  In the circumstances, the OR is of the view that D himself did not have the right to contest Ps’ claim. The OR is relying upon Ord v Upton[1] and Yu Chun Kit v Wong Wing Yau (formerly trading as Viewbond Cargo Service)[2].  Such right has been vested in the OR, and the OR does not consent to assigning the right to D.

25.  On 3 November 2023, I expressed a view on paper that I agree with the OR.  The said decision was conveyed to D by a letter dated 6 November 2023.

26.  On 9 November 2023, Ps’ counsel lodged their written submissions.  In the written submissions, Ps stated that they are seeking an order that D shall personally bear the costs of these proceedings.  Having seen those written submissions, on 13 November 2023, I directed that (a) the questions of costs should be explored in the hearing on 23 November 2023; (b) D may attend the hearing; (c) the OR should provide written submissions to the court.  I also said that I may review the decision made on 3 November 2023 in the hearing on 23 November 2023.

27.  On 17 November 2023, the OR provided their written submissions pursuant to my directions.

28.  At the beginning of the hearing on 23 November 2023, Mr Yip stated that Ps’ position is as follows:

(1)  Ps are not seeking an order requiring D to pay any damages in the hearing before me.  Ps are merely seeking an order in terms of the draft (“the Draft Order”) lodged together with Ps’ written submissions.  In respect of Ps’ application for an order in terms of the said draft, Mr Yip is of the view that D should have a right to make submissions.

(2)  Regarding costs, Ps are seeking an order that costs of these proceedings be borne by the bankrupt’s estate.  Mr Yip has stated unequivocally that if Ps obtain this costs order, Ps would only try to enforce the costs order against the bankrupt’s estate, and would not enforce the costs order against the properties acquired by D after discharge of the bankruptcy (“Ps’ Position on Costs”).

29.  Since Mr Yip has made it clear that Ps are not pursuing any claim for damages against D in the hearing before me, Ps’ claim against D is not a hybrid claim.  Accordingly, I set aside the decision made on 3 November 2023 and allowed D to make submissions in the hearing on 23 November 2023.  D did make submissions in opposition to Ps’ application in the hearing before me.

30.  As to Ps’ Position on Costs, I would discuss this later in this judgment.

D.  THE PRINCIPLES

31.  Recently, in Cheung Wai Ling Vicki v Cheung Oi Ling Aileen and Others[3], I have set out the principles concerning appointment and removal of personal representative(s), and the principles concerning the duty of personal representative(s) to render a full and proper account of the estate.  I am not prepared to recite those principles here.  Suffice to say that I bear those principles in mind in considering Ps’ application.

32.  D is now an undischarged bankrupt.  However, Mr Yip has fairly pointed out that an executor’s or an administrator’s title is not defeasible by bankruptcy and bankruptcy per se does not require the revocation of a grant.  However, in an appropriate case, the court could pass over the bankrupt executor/administrator and issue the grant in favour of someone else.[4]

E.  DISCUSSION

33.  Mr Yip submits that D should be removed as the administrator of the Father’s estate by reason of the following:

(1)  D’s substantial delay in the administration and distribution of the Father’s state without justification;

(2)  D’s failure to discharge the duty of rendering a true and perfect inventory and account of the Father’s estate; and

(3)  D is not a suitable administrator.

E1.    D’s substantial delay in the administration and distribution of the Father’s estate

34.  Mr Yip submits that although D was appointed as the administrator of the Father’s estate on 16 June 2008, D has not yet made distributions of the Father’s estate.  There is a substantial delay of more than 15 years.

35.  D submits that he has already made distributions, and the administration of the Father’s estate has been completed.  D submits that:

(1)  On 13 April 2015, P1 and P2 had already distributed the assets of the Father’s estate and the Mother’s estate amongst themselves, with P1 and P2 being distributed a sum of HK$775,132.48 and a sum of HK$814,933.17 respectively (totaling HK$1,590,065.65).

(2)  On 29 December 2006, P1 promised that her entitlements of the Father’s estate would be used for charitable purposes.  On 5 April 2008, P2 promised that both P1 and P2 would abandon their entitlements in the assets in Singapore in the Father’s estate.

(3)  D had made distributions of the Father’s estate by making donations to charitable bodies in accordance with the wishes of the Mother after the Mother’s death.

36.  In my view, D’s submissions are not supported by the evidence and cannot be accepted.

(1)  As to the alleged distribution of HK$ 1,590,065.65, the evidence shows that in fact the sums are from the Mother’s estate, not from the Father’s estate.  After the removal of D as the administrator of the Mother’s estate, Ps have returned the money to the new administrator of the Mother’s estate.

(2)  As to the alleged promises made by P1 and P2:

(a)  These allegations are denied by Ps.  There is no documentary evidence in support of D’s allegations.

(b)  It is inherently improbable that P2 would make a promise to give away P1’s entitlements in any part of the Father’s estate.  Further, even if P2 has said something to that effect, there is no reason why those words would constitute a promise binding upon P1.

(c)  The alleged promises are bare allegations made by D without support from any documentary evidence and without any corroborating evidence.  In the circumstances, I refuse to accept the truthfulness of these allegations.

(3)  As to the donations made to some charitable bodies:

(a)  D has produced some receipts showing that he did make some donations to some charitable bodies.  However, the receipts show that the donations were made in D’s own name, not in the name of the Mother or her estate.

(b)  The alleged wishes expressed by the Mother that her assets should be donated to charities are not supported by any documentary evidence or corroborating evidence.

(c)  The Mother passed away in 2009, but the donations were only made since 2015.  As submitted by Mr Yip, it is improbable that D made the donations in accordance with the Mother’s wishes.

(d)  Undoubtedly, P1 and P2 are the beneficiaries of the Father’s estate.  In respect of these donations, Ps have never been consulted, and their consent to the same has not been sought.

37.  In my judgment, there is no basis for D to say that he has duly made distributions and has completed the administration of the Father’s estate.  I find that there has not been any distribution to Ps, who are beneficiaries of the Father’s estate.  I also find that there has been inordinate and unjustifiable delay on the part of D in distributing the assets in the Father’s estate to Ps.

E2.   D’s failure to discharge the duty of rendering a true and perfect inventory and account of the Father’s estate

38.  Mr Yip submits that notwithstanding Ps’ repeated requests, D has failed to render a proper account of the Father’s estate.

39.  D’s position is that such accounts have already been provided.  D submits that:

(1)  an account has been sent to Ps’ email accounts on 18 January 2016 by an email from D’s former solicitor, Mr Jackson Ho;

(2)  in a meeting between Mr Jackson Ho and P2 on 26 January 2016, P2 obtained accounts of the Father’s estate from Mr Jackson Ho; and

(3)  since Ps only commenced the present proceedings on 4 August 2022, the delay in ascertaining the whereabouts of the assets in the Father’s estate is caused by Ps’ inaction.

40.  With respect, there is no merit in D’s submissions.

(1)  In Mr Jackson Ho’s email dated 18 January 2016, Mr Jackson Ho only enclosed the grant of the Father’s estate and the grant of the Mother’s estate but not the accounts of the Father’s estate in that email.

(2)  D’s submission concerning the meeting between Mr Jackson Ho and P2 on 26 January 2016 is based upon an email from P2 dated 26 January 2016.  In that email, P2 said that in the meeting, he and Mr Jackson Ho discussed about the Father’s assets in Singapore, and relevant charges for Mr Jackson Ho to handle these assets.  In the email, there was no mention of the Father’s estate in Hong Kong.  There was also no mention of accounts of the Father’s estate.  There is no basis for D to say that in the meeting, Mr Jackson Ho had given accounts of the Father’s estate to P2.

(3)  The fact that Ps have to commence these proceedings in 2022 is because D has failed to perform the duties of the administrator of the Father’s estate after a long period of time.  This matter itself is a factor in support of Ps’ case, and is not a point in favour of D.

41.  Regarding the accounts given by D in D’s Affirmation, I agree with Mr Yip that those accounts are unsatisfactory and cannot satisfy the requirements mentioned by Chow J (as he then was) in Chow Chak Kiu v Chow Man Chit[5].

(1)  Mainland Properties owned by 馬耀基:

(a)  D has never taken any step to ascertain whether 馬耀基 was indeed a name used by the Father during his lifetime, and whether the Mainland Properties are in fact assets in the Father’s estate.

(b)  D has never taken any step to ascertain the value of the Mainland Properties.

(2)  Cash deposited at bank accounts:

(a)  The figures provided in D’s Affirmation are in fact the figures in the Schedule of Assets and Liabilities annexed to the Grant, which are the balances in the bank accounts as at the date of the Father’s death, ie 8 December 2006.

(b)  D has not taken any step to ascertain the current balances in the bank accounts, and the present value of the assets under these bank accounts is unknown.

(3)  Cash and Shares in Hong Kong Land Holdings Ltd, Jardine Strategic Holdings Ltd, Mandarin Oriental International:

(a)  The figures of the cash balance (HK$180,727.96) and the value of shares in Hong Kong Land Holdings Ltd (US$60,890.20), Jardine Strategic Holdings Ltd (US$26,373.15) and Mandarin Oriental International (US$2,914.16) were copied from the Daily Position report provided by DBS Vickers (Hong Kong) Limited as at 12 May 2016.

(b)  The cash balance and shares were held in an account with DBS Vickers (Hong Kong) Limited, which was closed by D in May 2016.  D has failed to account for the whereabouts of these assets in D’s Affirmation after the account was closed.

(c)  D has also failed to account for the interest accrued for the cash balance (if any) and the change in value of the shares since 2016.

(d)  D has also not mentioned whether any shares have been liquidated, and if yes, what are the proceeds obtained, and the whereabouts of the proceeds.

(4)  Expenses in relation to the administration of the Mother’s estate:

(a)  D has not explained why the expenses in relation to the administration of the Mother’s estate should be paid from the Father’s estate.

(b)  Further, at [13(b)(iv)] of D’s Affirmation, D said that the total of the expenses is HK$ 361,669.  However, the total of the two bills exhibited by D is HK$ 226,569 (or HK$416,569 excluding the credit due to costs on account).  The discrepancy has not been explained by D.

(5)  Donations to charitable bodies:

(a)  For the reasons set out in [36(3)] above, in my judgment, there is no sufficient evidence showing that the donations were made by D on behalf of the Mother’s estate, on behalf of P1 and/or on behalf of P2.

(b)  At [13(b)(iv)] of D’s Affirmation, D said that the total of the donations is HK$490,090.36.  However, the total of the donations based on the receipts produced by D is HK$491,182.  The discrepancy is unexplained.

(6)  In my judgment, D has failed to discharge the duty of rendering a true and perfect inventory and account of the Father’s estate.

E3.   D is not a suitable administrator

42.  By reason of the aforesaid, I am of the view that D is not a suitable administrator of the Father’s estate.  This conclusion is further reinforced by the fact that D has indicated that he has no intention to investigate into the distribution of the Father’s estate in Hong Kong (“無意再追究該死者的香港遺產的分配”).[6]

E4.   Replacing D by a new administrator

43.  For the reasons set out in the above, in my judgment, D ought to be removed as the administrator of the Father’s estate, and a new administrator should be appointed.

44.  In order to avoid or to minimize the chance of having further disputes between Ps and D over the administration of the Father’s estate, I am minded to appoint Mr Tsang as the new administrator of the Father’s estate.  I am of the view that Mr Tsang is the suitable replacement administrator for the following reasons:

(1)  Previously, Ps and D have reached an agreement that D be removed as administrator of the Mother’s estate and Mr Tsang be appointed as the new administrator of that estate.  This shows that Mr Tsang is a professional trusted and accepted by both Ps and D.

(2)  Being the administrator of the Mother’s estate, Mr Tsang would be familiar with the background of the family and matters relating to the administration of the Father’s estate.

(3)  As a solicitor, Mr Tsang would have the requisite knowledge and skill to conduct a proper administration of the Father’s estate.

45.  Given the inaction or tardiness of D in administering the Father’s estate in the past 15 years, there is a real risk that D may not lodge the Grant with the court promptly even if he is ordered to so.  For the purpose of avoiding further delay to the due and proper administration of the Father’s estate, I would order that the Grant be revoked and a fresh grant be issued to the new administrator.[7]

E5.  Rendering a true and perfect account of the Father’s estate by D

46.  In order to facilitate the work of the new administrator, there should be a true and perfect account of the Father’s estate given by D.  It is D’s duty to render that account.  I would order D to render that account and to verify the contents therein by an affirmation made by him.

47.  I would also require D to deliver up all assets, monies, and documents in the Father’s estate to the new administrator.

48.  I would allow D to have 42 days to do all the aforesaid.

E6.   Costs

49.  At the beginning of the hearing, after Mr Yip stating Ps’ Position on Costs, I said that I would refrain from making any comment on that position. After the hearing, upon reflection, it is inevitable that I have to consider whether I would accept that position and make a costs order against the bankrupt’s estate.

50.  At the moment, my view is as that as a matter of law, it is impermissible for Ps to enforce a costs order made in these proceedings against the bankrupt’s estate.  At the time of the commencement of these proceedings, D has already been a bankrupt.  In the circumstances, the costs under the said costs order would not be a provable debt in bankruptcy.[8] Thus, Ps would not be allowed to enforce those costs against the bankrupt’s estate. 

51.  Mr Yip has made it clear that Ps are only seeking a costs order against the bankrupt’s estate, not a costs order against the properties acquired by D after the discharge of the bankruptcy.  By the reason set out in the above, at the moment, I am of the view that the costs order sought by Ps is something impermissible as a matter of law.

52.  As to the costs of these proceedings, on a nisi basis, I make no order as to costs.  Unless there is an application made by Ps within 14 days for variation of this costs order nisi, the costs order nisi would become absolute without a further order.  Any application for variation of the costs order nisi must be made by Ps by an inter partes summons, and the summons would need to be served on the OR.

F.   DISPOSITION

53.  For the reasons set out in the above, I give judgment to Ps.  The Draft Order submitted by Ps would need to be amended in accordance with this judgment.  Subject to those amendments, there be an order in terms of the Draft Order.

54.  Since D is unrepresented, I direct that upon D’s request, this judgment be interpreted to D by a court interpreter at a mutually convenient time at a place inside the High Court Building.